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How emerging markets are approaching crypto

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From Brazil to Nigeria, people turn to Bitcoin for different reasons than most of their speculating counterparts in North America. Namely, because it’s the most advantageous way for them to conduct international transactions. 

Such is the case with a 28-year-old poker player in Brazil who simply goes by Felipe, for safety. Poker is a legal form of gambling in Brazil, so Felipe can use Brazilian banks and regulated exchanges to earn income from home. He dropped out of law school because playing poker against foreigners with Bitcoin to spend was more profitable than becoming a partner at a local law firm. Felipe said he now outearns his brother, a middle-tier executive at one of Brazil’s top corporations. 

“Bitcoin is the best medium of money exchange in the poker community,” Felipe said. “I withdraw earnings as Bitcoin, or as Tether, to a Brazilian crypto exchange and sell it there.”

Felipe said he is wary of his government because he believes the Brazilian economy will experience a catastrophic shock in the next few years. Back in 1992, President Fernando Collor de Mello was impeached after confiscating millions of civilian savings accounts to offset national debts. Felipe doesn’t want his bank account forcibly emptied when the next crisis hits. This inspires him to accumulate Bitcoin, avoiding more traditional options stocks. 

“The pension funds system is completely broken,” Felipe added. “The thing with Bitcoin is, you don’t need it until you do.” 

Manuel Folgueiras is one of many Cuban users who joined the Bitcoin ecosystem over the past year. This 33-year-old economist, who lost his tourism industry job in 2020, now supports himself using various cryptocurrency projects.

“It’s very difficult to get Bitcoin, because we don’t have access to any exchanges and there are a lot of scams. Cuban banks don’t have relationships with crypto exchanges,” Folgueiras said. “Now I use Bitcoin for both savings and income, through trading arbitrage. We have to use a VPN and it’s very risky. If the exchange detects that you’re from Cuba, your account will get blocked.”

Global demand for Bitcoin has been surging since the pandemic began in 2020, pushing dollar-denominated prices briefly past $34,000 during the first week of January, 2021. For residents in many emerging markets, demand for Bitcoin is driven by concerns about the overall health of their national economies, not pure speculation. Some of these countries where Bitcoin markets are spiking, especially in Latin America and the Middle East, are seeing their domestic economies tailspin and are worried political controls could further threaten economic stability.

For example, since Western Union stopped operating in Cuba, more Cubans are using Bitcoin than ever before. For people in a variety of countries, pandemic policy changes reduced access to the dollar-centric financial system.

Folgueiras estimated he is one of roughly 80,000 people on the island involved in an unofficial brokerage business called Trust Investing, often called a Ponzi scheme by local technologists. In short, the business promises to trade cryptocurrency on behalf of “investors,” to whom they deposit lucrative returns. The project promises 200% returns, which seems impossible, and references questionable “partners” on the Trust Investing website. 

Those partner companies are registered to people associated with a variety of court cases across Latin America and, in June 2020, Panama’s National Securities Market Commission (CNMV) published a warning not to trust the Trust Investing company itself. Even Folgueiras acknowledged that many people call this business a scam. But he said returns from the Trust Investing program are helping him survive the abysmal job market. It’s a gamble whether the company will give him returns or run away with his money, a risk he’s willing to take. 

Plus, Folgueiras added, any form of Bitcoin business in Cuba is already “very risky.” There aren’t many regulated, trustworthy exchanges openly serving Cubans today, due to U.S. sanctions. Aside from the remittance startup, BitRemesas, the last compliance-oriented startup that tried serving this market shut down in 2019. As such, many Cubans turn to questionable schemes, or WhatsApp, instead. 

“Cubans get Bitcoin via WhatsApp groups, peer-to-peer trading. The most popular mobile wallets are Coinomi, Enjin Wallet and Trust Wallet, because most people in Cuba only use a cell phone. It’s a mobile-only market,” Folgueiras said. “Bitcoin changed my life in a positive way and became an important source of income. Cryptocurrencies are also an interesting way for Cubans to shop online and send international payments or remittances.” 

This grassroots, mobile-only environment is common across many small countries with underdeveloped economics. Likewise, Fodé Diop, founder of the Dakar Bitcoin Developers meetup in Senegal, told CoinDesk last year that Senegal was not just a mobile-first market; it’s a mobile-only Bitcoin scene. Unlike North America and Europe, many emerging-market crypto communities only use cell phones for everything from research and trading to storage. 

On the other hand, it would be a mistake to assume most emerging-market Bitcoin users are marginalized by the global banking system. To the contrary, in countries like Nigeria and Brazil, many upper-middle-class entrepreneurs and gamers use Bitcoin to conduct perfectly legal business. According to data from the global peer-to-peer (P2P) markets LocalBitcoins and Paxful, there were more than $25.3 million worth of P2P Bitcoin trades last year in Brazil alone. 

Meanwhile, in Africa, Nigerian P2P Bitcoin volumes dwarf those numbers with a cool $357 million. Likewise, BuyCoins co-founder Tomiwa Lasebikan said his Nigerian cryptocurrency exchange ballooned from an average of $5 million in monthly volume in December 2019 to $21 million by December 2020. 

He said several factors spurred local growth, including anti-police brutality activists like the Nigerian Feminist Coalition, which collected bitcoin donations after being denied banking access, and stricter banking limitations on Nigerians paying for international services.

A lot of people in Nigeria are running into a problem that they couldn’t renew subscriptions, like Spotify or Amazon, with their Nigerian accounts,” Lasebikan said. “Then, in October, there was a whole lot of interest in cryptocurrency, not just Bitcoin, for aggregating donations for people protesting police brutality. A lot of activists had their bank accounts shut down. Continued fundraising like this, both inside and outside the country, would not have been possible two decades ago.” 

He added his exchange startup now serves roughly 12,000 active users a month. Nearby, Binance communications lead in Nigeria, Damilola Odufuwa, said her global exchange company facilitated hundreds of virtual events for 17,000 Nigerian crypto beginners in 2020. These educational programs covered basic terminology, trading strategies and guides to opening exchange accounts. 

“During the pandemic, it was hard to get things into the country, including remittances,” Odufuwa said. “Now there’s also this need to use cryptocurrency to donate [to activists]…we plan to at least quadruple educational programming this year.”

Depending on the user’s socioeconomic background, people use Bitcoin to earn income from online games like poker, trading cryptocurrencies or offering freelance services to international clients. Odufuwa said thousands of the new users she’s seen during the pandemic want to profit from their developer skills, not just trades. So her company will offer more developer training related to the open-source Binance Smart Chain project. Although it’s impossible to accurately quantify, it seems as though at least hundreds of freelancers around the globe now depend on Bitcoin for income. 

One such LocalBitcoins user in Latin American, Venezuelan journalist José Rafael Peña, has been earning the majority of his income in Bitcoin since late 2016. He estimated that cryptocurrency writing gigs account for 90% of his income. 

“Bitcoin, in some circumstances, is a very helpful tool, especially when you live in a country with a chaotic economy and limited financial tools,” Peña said. “I began using Bitcoin because it let me protect against the bolivar’s devaluation, even without a dollar bank account.”

All things considered, Odufuwa said emerging markets saw “tremendous” growth since the pandemic began. But Peña warned not to confuse that growth with a mainstream “solution” to local government woes. 

“Most people try to survive the crisis in any way,” he said. “Even here, crypto is a niche.”

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Terminus raises $90M to grow its B2B marketing platform, now valued at around $400M

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Sales and marketing are often considered a single category on a business plan, but ironically, when it comes to building apps and services to help with them, they usually become separate entities, and so too do the teams that address sales and marketing in organizations. Today, however, a startup called Terminus — which is building a platform that views sales and marketing in a more integrated way, through account-based marketing — is announcing funding and growth, a sign of how its approach is gaining more traction.

The startup has closed a Series C of $90 million, at a valuation we understand from sources to be around $400 million. This is a huge jump on Terminus’s valuation in its last round, which was $96 million post-money in 2018, according to PitchBook data.

Part of the reason for the hike is likely because of the huge focus that digital marketing has had especially in the last year — a time when, because of the pandemic, a lot of more legacy and traditional channels have ceased to be as visible). Account-based marketing alone was estimated, in 2018, to be a $458 billion market opportunity.

Another reason for interest in Terminus specifically is because of its customer record within that. It has around 1,000 enterprise customers, including divisions of IBM, Salesforce, Thomson Reuters, and more.

“We’re building the new marketing automation,” said CEO Tim Kopp in an interview. “We think account-based marketing is the most important thing to have happened in sales software. Teams are switching from lead-based to account-based approaches, and we’ve now moved into addressing all points of engagement, a modern B2B marketing cloud.”

The equity round is being led by Great Hill Partners, with previous investors Atlanta Ventures and Edison Partners, and new backer Hallet Capital also participating. The funding brings the total raised by Terminus — co-headquartered in Atlanta, GA and Indianapolis, IN — to about $120 million.

The world of marketing has seen a huge shift in the two decades, with the rise in internet consumption, and the proliferation of digital services, driving a big business in what is now collectively called “martech”.

The area that Terminus specifically focuses on within that is account-based marketing. In short, this is a way for B2B sales and marketing teams to conceive of potential targets at a business not as individual entities but collective groups. This means a more joined up effort to work across whole organizations, providing a way to market something to more than one person, increasing the chances of connecting with someone to then make the sale.

Terminus’ platform and approach, CEO Kopp points out, essentially brings the functions of sales and marketing together, instead of needing to hand off work from one to the other (eliminating the admin and cost of working across different software within those groups as part of that).

“We see an overwhelming opportunity in bringing together marketing and sales,” he said in an interview. “Marketing is joining in on sales meetings and sales has become a part of the client success, where you are marketing to your own customers. It’s an area where customers stink because they typically come at it from the sales or marketing side.”

Terminus’ platform today consists of a “data studio” that brings together sales intelligence, account information, and other data sources to help compile a list of would-be targets. On top of this, it also has been building out a marketing engine that includes the ability to build advertising, email and web campaigns, and chatbot management. Some of this has been built in-house, and some has come to the company by way of acquisitions (for example the chat functionality comes by way of its acquisition of Ramble last April).

Terminus is by far not the only company working in this area. Others include Marketo (part of Adobe), 6sense, Sendoso and many others. Terminus’s approach is to bring different aspects of the marketing and sales process (analytics, orchestration, automation and execution) into one platform.

Fittingly, the startup’s name was based on an early nickname for Atlanta, and used as a reference to its aim of being the single for its customers’ various marketing and sales activities.

This is one reason why investors have been knocking.

“Terminus continues to redefine how teams go to market, innovating how companies generate revenue in a digital-first environment,” said Derek Schoettle, a growth partner at Great Hill. “We’ve been so impressed with this team, the company’s significant growth over the last year, its continued product innovation, and the huge market opportunity ahead.”

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Berlin’s MorphAIs hopes its AI algorithms will put its early-stage VC fund ahead of the pack

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MorphAIs is a new VC out of Berlin, aiming to leverage AI algorithms to boost its investment decisions in early-stage startups. But there’s a catch: it hasn’t raised a fund yet.

The firm was founded by Eva-Valérie Gfrerer who was previously head of Growth Marketing at FinTech startup OptioPay and her background is in Behavioural Science and Advanced Information Systems.

Gfrerer says she started MorphAIs to be a tech company, using AI to assess venture investments and then selling that as a service. But after a while, she realized the platform could be applied an in-house fund, hence the drive to now raise a fund.

MorphAIs has already received financing from some serial entrepreneurs, including: Max Laemmle, CEO & Founder Fraugster, previously Better Payment and SumUp; Marc-Alexander Christ, Co-Founder SumUp, previously Groupon (CityDeal) and JP Morgan Chase; Charles Fraenkl, CEO SmartFrog, previously CEO at Gigaset and AOL; Andreas Winiarski, Chairman & Founder awesome capital Group.

She says: “It’s been decades since there has been any meaningful innovation in the processes by which venture capital is allocated. We have built technology to re-invent those processes and push the industry towards more accurate allocation of capital and a less-biased and more inclusive start-up ecosystem.”

She points out that over 80% of early-stage VC funds don’t deliver the minimum expected return rate to their investors. This is true, but admittedly, the VC industry is almost built to throw a lot of money away, in the hope that it will pick the winner that makes up for all the losses.

She now plans to aim for a pre-seed/seed fund, backed by a team consisting of machine learning scientists, mathematicians, and behavioral scientists, and claims that MorphAIs is modeling consistent 16x return rates, after running real-time predictions based on market data.

Her co-founder is Jan Saputra Müller, CTO and Co-Founder, who co-founded and served as CTO for several machine learning companies, including askby.ai.

There’s one problem: Gfrerer’s approach is not unique. For instance, London-based Inreach Ventures has made a big play of using data to hunt down startups. And every other VC in Europe does something similar, more or less.

Will Gfrerer manage to pull off something spectacular? We shall have to wait and find out.

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Lob raises $50M for its direct mail platform

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Lob is a startup promising to help businesses deliver physical mail more quickly and affordably, and with more personalization.

The company estimates that its platform has been used to deliver mail to one in two U.S. households. And today, it’s announcing that it has raised $50 million in Series C funding.

CEO Leore Avidar told me he founded Lob with Harry Zhang nearly a decade ago to “allow people to send mail programmatically.” Over time, the company has become increasingly focused on enterprise clients — its 8,500-plus customers include Twitter, Expedia and Oscar Health — although Avidar said it will always offer a product for small businesses as well.

Avidar explained that in a digital age, there are two main categories of physical mail that Lob continues to support for its customers. First, there’s mail sent for “a regulatory purpose, a compliance purpose” — in other words, mail that businesses are legally required to send in printed form. Second, there’s direct mail sent as marketing, which Avidar said many companies are rediscovering.

“Marketing as a whole is always trying to find a unique channel in order to make their customer aware of whatever their call to action is,” he said. “Right now, social is really expensive, Google AdWords is super expensive, with email you can easily unsubscribe. No one’s been paying attention to direct mail, and the prices don’t scale with supply and demand.”

Lob says that it can reduce the execution time on a direct mail campaign by 95%, from 90 days to less than a day. For the actual printing and delivery, it has built out a network of partners across the country. And other companies like PostPilot and Postalaytics are building on top of the Lob platform.

The startup has now raised $80 million in total funding. The new round was led by Y Combinator Continuity Fund — Lob participated in the YC accelerator and the Continuity Fund also led the startup’s previous funding.

Avidar said the company is planning to triple the amount of physical mail delivered through the platform this year, which means the round will allow it to continue expanding the Print Delivery Network, as well as increasing headcount to more than 260 employees.

“Lob is leading the digital transformation of direct mail, a business process used by every company on Earth that has remained virtually untouched by software,” said YC Managing Partner and Lob board member Ali Rowghani in a statement. “Lob’s platform delivers exceptional value to some of the world’s largest senders of direct mail by lowering cost and improving deliverability, tracking, reporting, and ROI. Even for the most sophisticated senders of direct mail, Lob’s API-driven product is vastly superior to legacy approaches.”

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